How do Foreign IPOs Attract Investor Attention? A Study of the Impact of Language (WITHDRAWN)

Abstract

Language is increasingly recognized as having the ability to shape strategic outcomes. To understand language’s impact in entrepreneurial settings, we study language in the context of foreign initial public offerings (IPOs), a setting where organizations may suffer both from the liability of newness and the liability of foreignness. Our sample consists of the population of foreign IPOs debuting in the United States between 2001 and 2014, which collectively raised over $60 billion in capital. We find that both the new ventures’ and the media’s language impact investors by influencing the level of interest in the IPO. Specifically, an organization’s language can foster positive sentiment, while the media’s use of analogies plays a pivotal role in familiarizing and legitimizing unfamiliar organizations. Overall, our study offers insight into the power of words in managing the challenges of the liability of newness and foreignness.